IMF warns of easing-sparked asset bubbles

TOKYO--Monetary easing in the developed world could cause overheating and asset bubbles in emerging economies, the International Monetary Fund's managing director said in Tokyo on Sunday.

“Accommodative monetary policies ... could strain the capacity of those economies to absorb the potentially large flows and could lead to overheating asset price bubbles,” Christine Lagarde told the close of the IMF and World Bank's annual meeting.

Critics in emerging nations have argued that easing measures, particularly in the United States, have driven down the value of the dollar and sparked huge capital flows to spill across their borders, raising the risk of overheating and driving up national currencies.

On Friday, Brazilian Finance Minister Guido Mantega warned that his country would take “whatever measures it deems necessary” to fight the problem.

“Emerging markets can't passively endure large and volatile capital flows and currency fluctuations caused by rich countries' polices,” he said in Tokyo.

“Advanced countries cannot count on exporting their way out of the crisis at the expense of emerging-market economies.”